Europe MIBK producer targets 10-12% price hike to protect margins

11 October 2013 23:59[Source: ICIS news]

LONDON (ICIS)--A European producer of methyl isobutyl ketone (MIBK) said this week it plans to raise spot prices by 10-12% over the next few weeks, despite current weak demand, to protect margins from rising feedstock costs.

If current average MIBK spot prices increase by 10%, they will reach levels last seen in April.

The planned increase is due mainly to higher costs of feedstock acetone, the producer said. “Acetone prices have been increasing over the past few months. We want to protect our margins,” it said.

Monthly contract and weekly spot prices of acetone have been on the uptrend since July, while weekly spot MIBK prices have been trending lower, therefore squeezing producers’ margins.

Acetone prices are being supported by tighter supply caused by cuts in phenol production.

Another producer acknowledged that margins are thinner, but declined to say whether it will increase prices.

Other market participants are against higher MIBK prices. “Demand (for MIBK) is still poor, so there’s no justification for an increase in prices,” a trader said.

Another trader said: “I can follow the argument of raising prices to get higher margins. After all, acetone tends to be a bit tight. But MIBK consumers don’t care about feedstocks. As a businessman, I can’t accept higher prices because demand (for MIBK) is low.”